Correlation Between Summit Materials and Allegion PLC
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Allegion PLC at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Summit Materials and Allegion PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Allegion PLC, you can compare the effects of market volatilities on Summit Materials and Allegion PLC and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Summit Materials with a short position of Allegion PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Allegion PLC.
Diversification Opportunities for Summit Materials and Allegion PLC
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Summit and Allegion is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Allegion PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegion PLC and Summit Materials is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Summit Materials are associated (or correlated) with Allegion PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegion PLC has no effect on the direction of Summit Materials i.e., Summit Materials and Allegion PLC go up and down completely randomly.
Pair Corralation between Summit Materials and Allegion PLC
Considering the 90-day investment horizon Summit Materials is expected to generate 1.37 times more return on investment than Allegion PLC. However, Summit Materials is 1.37 times more volatile than Allegion PLC. It trades about 0.06 of its potential returns per unit of risk. Allegion PLC is currently generating about 0.03 per unit of risk. If you would invest 3,266 in Summit Materials on October 29, 2024 and sell it today you would earn a total of 1,950 from holding Summit Materials or generate 59.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials vs. Allegion PLC
Performance |
| Timeline |
| Summit Materials |
| Allegion PLC |
Summit Materials and Allegion PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Allegion PLC
The main advantage of trading using opposite Summit Materials and Allegion PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Allegion PLC can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Allegion PLC will offset losses from the drop in Allegion PLC's long position.| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie Industries |
| Allegion PLC vs. MSA Safety | Allegion PLC vs. Resideo Technologies | Allegion PLC vs. NL Industries | Allegion PLC vs. Brady |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |